Market Commentary June 12, 2019

The Trading Daily Market Commentary features a summary of selected market segments as well as economic matters. Its content of interest is made available to all traders and investors at large

Equities market failed to support an initial movement to the upside and consumed the much part of yesterday's session bestowing a lack of direction. The leading indices hopped back and forth over the unchanged price line, finally settling slightly lower on the day.

After achieving higher finishing for six consecutive trading sessions, the DJI slid just over 14 points or 0.1% posting a 26048 closure. The Nasdaq 100 finished small up 12 points or less than a two tenth of a percent to conclude at 7514, while the broader S&P 500 dipped 1 point or 0.03% to close at 2886.

The opening energy on Wall Street partly echoed recent upward momentum, which has promoted the stock market to bounce well off the several-month lows levels set in May.

Anticipation about a possible interest rate cut by the banksters (Federal Reserve) has offered to the recent rebound for the stock markets, with the U.S. central bank due to address its latest monetary policy ruling in the upcoming week.

Nada chance, for the market rate, cut expectation. 

As the world market(s) anticipates the next series of monetary madness, we have to state that it is surpassing to see this enthusiasm because there are so many economic numbers pointing to weaker activity, everyone is bulled up on the Federal Reserve cutting interest rates while the yield curve in many parts of the world are inverted.

We know many traders and investors think a Federal Reserve cut is a layup by July: Showing current 75 percent odds down from 83 percent last week though it is not, particularly with the stock markets posting near a record high levels and with Fed chairman Jay Powell declaring concerns over extravagantly leveraged balance sheets. 

Hereabouts then lies the chasing of the tail where the powerful one-week equity market rally is a play that the Federal Reserve will furnish the markets all the candy it craves next month however what if it doe not?.

With the U.S. 3 Year Treasury Note being susceptible to expectations for Federal Reserve monetary policy, what is this saying regarding the forthcoming FOMC meetings? Well, this is too early to say for this month and the next, but it is undoubtedly a message and understanding where the interest rates are most likely are heading in the next couple of years on the short end. 

In this case, circumstances suggesting a lower direction. As for as next week is a concern, we think there are nada odds that Federal Reserve will cut rate as it really makes no sense with upcoming of the president Trump, and General Secretary Xi meeting.

With just nine rates to cut considering that the Fed wants to get back to zero levels, which we are vehemently against, Fed needs to be truly careful here, that the equity market's addiction to its monetary policy, the bubbles produced and the immense leverage in the business sector that ten years of monetary policy backing helped to form. 

Additionally, the long end of the rate curve has already lessened dramatically for the residential housing market, and we have seen only moderate help from that.

The NFIB (National Federation of Independent Busines) addressed this wholly by saying: Many onlookers are claiming that the economy demands added 'artificial stimulus' from the Fed. This not so. Interest rates are quite lower enough to hold credit flowing. What is vital is economic growth that is strong enough to create new investments look valuable and profitable.

Trade recommendation

Given the outlined support levels for the price drop, a sell stands attractive. The yesterday's dip produces a new selling opportunity, as S&P500 confirms and develops resistance level within the Inner Index Dip pattern. Taking a sell position from the existing Mean Res 2883 is of interest; but, the further confirmation could be expected.

A firm lower daily closure below Mean Res 2883 structure would be very encouraging. Targets to the downside are Mean Sup 2802  and then Mean Sup 2743 and ultimate Inner Index Dip 2675. The stops on this event should be addressed with some breathing room above the shown demand territory, Key Res 2945


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